Check out this development on audit paper requests featuring a court battle between Hong Kong’s Securities and Futures Commission and Ernst & Young Hong Kong after E&Y failed to produce SFC-requested records.. It appears that it’s not just the PCAOB that’s having problems gaining access to China-based companies’ audit papers due to an auditor’s interpretation of China’s State Secrecy laws (as covered in this blog).

It will be interesting to see how E&Y is going to defend itself on this in open court, particularly given there’s a recent new law on accountant liability in Hong Kong that significantly ups the ante for auditors. Thanks to Liza Mark of Dorsey & Whitney for pointing this development out and her insight into this area!

To expound on Hong Kong’s new accountant liability law, it’s a little convoluted – the Hong Kong Legislative Council just passed a comprehensive rewrite of the existing Companies Ordinance of Hong Kong (Cap 32). One of the major initiatives of the rewrite provides for the imposition of criminal liability on auditors of Hong Kong incorporated companies for “inaccurate auditor’s report. Here’s a set of FAQs for the new Companies Ordinance rewrite – and here’s the Major Initiatives explanation. This memo does a good job of summarizing the situation. Note that the amended Companies Ordinance is waiting on implementation regulations, so it will take a while before it’s implemented.

Mailed: July- August Issue of “The Corporate Counsel”

We just mailed the July- August Issue of The Corporate Counsel, and it includes pieces on: